Urbanization

1. Urbanization Indermit Gill and Chor-Ching Goh

2. Three places Sriperumbudur. A town of about 100 thousand on the Chennai-Bangalore highway In 1991, a village where India’s prime minister was assassinated. By 2006, Hyundai had produced one million cars there. Shenzhen. A city of 7 million near Guangzhou and Hong Kong In 1980, not much more than a fishing village By 2006, its port shipped exports greater than all of India’s. Seoul.A metropolis of 12 million, for many years mainland Asia’s most prosperous city In 1970, a squalid slum-ridden place. By 2006, the largest originator of patents after the US, Germany, Japan and Taiwan (China). 2

3. Sriperumbudur in 1991 Just a small village where Prime Minister Rajiv Gandhi was assassinated Source:s http://

4. Sriperumbudur today The home of Hyundai and others on the Chennai-Bangalore Highway Source:s http://

5. Shenzhen in 1980 A fishing village of several thousand near Guangzhou Source: http://www.newsgd.com/specials/30yearsreform/achievments/content/images/attachement/jpg/site26/20081126/0010dc53fa040a9730a527.jpg Source: http://4.bp.blogspot.com/_Kp1mQeobrgo/SZvXBdJBxlI/AAAAAAAAAJU/U7clXduYE9E/s1600-h/shenzhen+farm.jpg

6. Shenzhen today A city of 7 million, specializing in electronic manufacturing Source: http://al.china-embassy.org/eng/zggk/W020081223055375525157.jpg Source: http://www.littleredbook.cn/wp-content/uploads/2009/02/littleredbook_dot_cn_city-snapshot_shenzhen.jpg

7. Seoul in 1925 Gwanghwa Gate, the main entrance of Gyeongbokgung palace Source:s http://

8. Seoul in 1962 Sejong-Ro: Same location, same street Source:s http://

9. Seoul today Same street—Sejong-Ro—the busiest in downtown Seoul Source:s http://

10. Sriperumbudur and India Economic density in India, a country still ambivalent about urbanization www.worldbank.org/wdr2009

11. Shenzhenand China Economic density in China, a country in the midst of an aggressive urbanization www.worldbank.org/wdr2009

12. Seoul and South Korea Economic density in South Korea, a country that has seen the fastest urbanization of all time www.worldbank.org/wdr2009

13. Economic Density Clip: Economic Density Full Documentary at www.worldbank.org/wdr2009

14. The 2009 WDR Chapters 1, 4 and 7 develop an Urbanization Strategy www.worldbank.org/wdr2009

15. An Urbanization Strategy Should be realistic Must recognize some stylized facts observed for early, recent, and late urbanizers Should be rigorous Must be informed by economic analysis that identifies the drivers of these changes Should be implementable Must identify a sequenced set of public policies for places at different stages of urbanization 15

16. The Elements of an Urbanization Strategy Recognize stylized facts A summary of Chapter 1: Density. Utilize insights from analysis A summary of Chapter 4: Scale Economies and Agglomeration. Identify practical policies A summary of Chapter 7: Policies for an Inclusive Urbanization. 16

17. The Facts • Urbanization is fastest at low income levels. • Because the sectoral transformation from agriculture to industry happens early. • Today’s urbanization is not unprecedented. • The pace and patternof urbanization is similar for early, middle, and late developers. • Portfolios of settlements tend to be stable. • Metropolises, cities, and towns appear to serve fundamental economic functions. 17

18. Urbanization happens early Much of urbanization happens before countries get to $5,000 per capita Source: WDR 2009. 18

19. The pace of urbanization has not changed much Urbanization’s speed is not different from that in the 19th century Source: WDR 2009, Chapter 1. 19

20. Nor has its distribution The relative size distribution of urban settlements is stable over time Source: WDR 2009, Chapter 1. 20

21. Primate cities are similar A rapid rise in size, then a leveling off Source: WDR 2009, Chapter 1. 21

22. What is different? Size The absolute size of the world’s largest cities is much larger today Source: WDR 2009. 22

23. What is not? Slums Early, middle, and later urbanizers all had slums “The houses are poky and ugly, and insanitary and comfortless …distributed in incredibly filthy slums” in London. --George Orwell “The first encampments of Baltimore’s poor were at the water’s edge. Time and again, outbreaks of yellow fever, malaria, cholera, typhoid fever swept the town. By the 1890s, Polish immigrants had supplanted the Irish and Germans, creating a ghetto of a new dimension.” “In the 15 years between 1930 and the end of the war, the population of Singapore doubled to a million people. The physical condition of much of the existing housing was dismal.”

24. Slums have precedents Early, middle, and later urbanizers all had slums “Although this is a hugely expensive area in Paris to live today, in Victor Hugo’s day it was a slum area, close to the Bastille Prison.” “Katajanokka’s transformation from a low-income housing area of Helsinki. A former slum had become a prestigious residential area for the privileged classes.” Melbourne's most infamous slum, Little Bourke Street, … by the 1880s was completely filled up with all kinds of filth comprising garbage tips, putrid liquid, straw rags, and other rubbish… “

25. Urbanization is messy, but necessary Clip: The Industrial Revolution and Cities Full Documentary at www.worldbank.org/wdr2009 25 Full Documentary at www.worldbank.org/wdr2009

26. The Analysis Human settlements serve market needs. Just as firms and farms provide goods and services, settlements provide services too. Urban settlements are complements, not substitutes. Most countries need a full complement of settlements. Policies should address function, not size, of settlements. Manage the full portfolio of places. 26

27. Settlements serve different market needs Towns and small cities allow firms and farms to exploit internal scale economies, which are low in light and high in heavy industries. Medium-sized cities facilitate localization economies which arise from sharing inputs and close competition among firms within the industry. Metropolisesfacilitate urbanization economies which come from industrial and cultural diversity that fosters innovation. 27

28. Towns: internal economies Towns facilitate internal scale economies which come from large plant sizes and are high in heavy industries, and low in light industries Source: http:// 28

29. Cities: localization economies Cities facilitate localization economies that come from sharing inputs and infrastructure, and competition among firms in the industry Source:s http:// 29

30. Metropolises: urbanization economies Metropolises facilitate urbanization economies which come from industrial and cultural diversity that fosters innovation Source:s http:// 30

31. The Policies Recognizing complementary functions of places helps to make urbanization inclusive. Principle: maximize agglomeration economies through economic integration. Policies become complex as urbanization advances. Principle: More policy instruments are needed in places where urbanization is advanced than where it has just begun. Prioritization helps to facilitate inclusive urbanization at all stages of development. Principle: Start with common institutions, then also connective infrastructure, and only then targeted interventions. 31

32. Integration gets harder… …. as urbanization advances, and more policy instruments are needed Institutions to encourage density in Popayan, Colombia Institutions and infrastructure to encourage density and reduce distance in Bucaramanga, Colombia Institutions, infrastructure and interventions to encourage density, reduce distance, and lower divisions in Bogota

33. An Urban Strategy For areas of incipient urbanization: • Indicator: Urban shares of 25 to 50 percent • Priority: Neutrality between rural and urban areas • Instrument: Spatially blind “institutions” • Provide basic social services such as schooling, sanitation, streets and security • Ensure functional rural and urban land markets • Principal responsibility: Central government. Areas in Korea 33

34. An Urban Strategy Indicator: Urban shares of between 50 to 75 percent Priority: Connectivity between urban and rural areas, and within urban areas. Instruments: Institutions, and spatially connective infrastructure Provide basic social services Ensure functional land markets Invest in rural-urban and inter-urban infrastructure Principal responsibilities: Central and state governments For areas with intermediate urbanization: Changsha in China 34

35. An Urban Strategy Indicator: Urban shares of >75 percent Priority: Livability of urban areas. Instruments: Institutions, infrastructure, and spatially targeted interventions Institute basic social services and ensure functional land markets Invest in rural-urban and inter-urban infrastructure Intervene to integrate slums and improve the environment Principal responsibilities: Central, state, and local governments For areas with advanced urbanization: Bogota in Colombia 35

36. Calibrating policies An “I for a D”—An instrument per dimension of urbanization’s difficulty 36

37. Institutions Land tenure security and property rights • England 16th century: enclosure movement in 1500; Enclosure Act 1604 • Denmark 18th century: Abolition of “villenage” in 1760; communal to private land holdings • USA 19th century: 1862 Homestead Act – the foundation of property rights Frihedsstøtten (the pillar of freedom) in Copenhagen, commemorating the abolition of villenage 37

38. Institutions England: 18th-19th century: Land Enquiry Commission; 1832Reform Acts; Land valuation decrees Sweden, 1960s-70s: Royal Housing Commission in 1945; Million Homes Programme Hong Kong, 1930s-70s: 1935 Housing Commission and Town Planning Ordinances; first land-use strategy “Zoning Plan” in 1963 Republic of Korea, 1980s-90s: basic amenities and property rights Ease of land use conversion, basic services Frihedsstøtten today 38

39. Institutions and Infrastructure • Greater London, 18th-19th century: Land valuation decrees; underground; The Housing of the Working Classes Act 1890 and Cheap Trains for London Workers Bill 1890 • New York Area, 19th-20th century: 1916 zoning resolution; 1938 City Planning Commission; 1961 zoning law. • Hong Kong, 1930s-80s: 1935 Housing Commission and Town Planning Ordinance (amended overtime); 1963 first land-use strategy “Zoning Plan”. • Bangkok Metro Area, 2000s: zoning and parking spaces; traffic demand controls. Land markets, transportation 39

40. Institutions, Infrastructure and Interventions Land use conversion, transport, housing • London, 19th century: ease of conversion rules, expansive transport infrastructure, affordable housing near London. • New York, 19th-20th century: zoning rules which respond to market needs, integrated transport networks. • Hong Kong ,1930s-80s: responsive land market institutions: evolving Town Planning Ordinances amended over time to address transport and housing needs. • Singapore, 1960s-80s: responsive zoning laws (reflected in rising floor-area ratios), expanding transport links, public housing programs. • Seoul, 1980s-90s: universal basic amenities; property rights; and credit for slum dwellers to become home owners. 40

41. Conclusion: 3 stories India: fighting urbanization. The story of Mumbai since 1980. China: facilitating urbanization. The story of Shenzhen since 1980. South Korea: successful urbanization. The story of Seoul since 1950. 41

42. Fighting Urbanization Clip: Mumbai’s Slums Full Documentary at www.worldbank.org/wdr2009 Full Documentary at www.worldbank.org/wdr2009

43. Facilitating Urbanization Clip: Shenzhen and China Full Documentary at www.worldbank.org/wdr2009 Full Documentary at www.worldbank.org/wdr2009

44. Seoul in the 1950s Cheonggye river, and the biggest slum in Seoul Source: Aving,network

45. Seoul in the 1970s A highway is built on the river, through and over the slums Source: Aving,network

46. Seoul in the 1980s More infrastructure and new businesses next to Cheonggye-cheon, the slums were moved to other parts of the city Source: Aving,network

47. Seoul in 2009 Cheonggyecheon in 2005: Mayor Lee Myungbak, the current president of South Korea, removed the highway and recovered the riverfront Source:

48. Prioritization: An “I for a D” Calibrating the Policy Response 48

49. An Urbanization Strategy A large part of urbanization is over by the time a country reaches upper middle income—viz., levels of per capita income of about $3,500. The relationship between income and urbanization is not different for early and later developers. The relative size of urban settlements within a country is similar for countries at different levels of income, and so is stable over time. Must recognize stylized facts 49

50. An Urbanization Strategy Towns like Sriperumbudur enable firms and farms to exploit the advantages that come with size— “internal scale economies” Cities like Shenzhen allow firms in similar industries to localize and become efficient—”localization economies” Metropolises like Seoul encourage learning and innovation that comes from industrial diversity—”urbanization economies” Must be based on rigorous analysis 50